Friday, January 27, 2012

This last month has been one of the best markets for break-out traders we’ve seen in a long time. Everything works: not only the first break-out, but also the re-test, which is a sign of how generous the tape has been this month. What do we mean by successful re-test? Take a look at these examples:
We gave the first trend-line alert on $AMZN a while back as a freebie on the stream– first buy was trend-line break. Stock ran, then was faded back to trend-line and then ran again up to our next alert (this one was for HCPG subs only) at 185. Again fantastic run, and again re-test and a break-out of our third pivot which was trend-line break. Great trading stock.

$POT 44 was another freebie for the stream — nice break-out on original break and look how it came back to test the number and bounce this week.

$X 29 was HCPG newsletter alert for weeks — it finally went, re-tested the number and bounced yet again. Usually each of our alerts is good for one trade. We’re now finding that the alert is giving us multiple trades — a sign of an extremely good tape for traders.

One last example in $SLW — 32 was our buy spot in the newsletter. Worked great first time through, but look how it came back to re-test 32, find support on the number and bounce like a rocket.

All traders with similar strategies to ours want this tape to stay like this for as long as possible. Of course it never lasts for too long but as traders we have to milk it for what it’s worth. We’ve written a few times this week in the newsletter not to overthink the market. Yes we’ve come straight up, yes we’re overbought, but in this tape you have to put that aside and focus on the individual set-up. If it’s good, take it, if it’s not, pass. Today a good example as $SPY was flat yet there were break-outs galore left and right in momentum stocks.

Our strategy going forward is the same — we’re not going to hyper analyze strategies – whatever sets up on our list we’ll take a shot ($NUS$LNKD were the two HCPG break-outs for today — fantastic moves in a flat market), and if nothing sets up then it’s usually the sign that market wants to pull-back. One step at a time.